Common Red Flags Investors Should Watch for Before Choosing a Mortgage Fund

How Fidelis Private Fund Builds Confidence Where Others Raise Concerns

Investing in mortgage funds can be a smart way to generate stable income while preserving capital—but only if the fund is structured and managed with discipline, transparency, and long-term alignment. Not all funds meet this standard. In fact, many red flags can signal when a mortgage fund may not be in the best interest of investors.

At Fidelis Private Fund, we’ve spent decades building a platform that anticipates these issues. We understand what investors should watch for, because we’ve designed our fund to be the kind of trusted alternative that avoids them altogether.

Underwriting Red Flags: When Loan Quality Becomes Questionable

Some funds focus on growth at the expense of underwriting standards. Watch for telltale signs like rapidly growing loan volume without operational expansion, high loan-to-value (LTV) ratios, and speculative asset concentration. These practices often signal shortcuts and misaligned priorities.

The Fidelis Difference:
Fidelis maintains a conservative maximum LTV of 65%, ensuring a strong equity buffer in every loan. We pace our growth intentionally, investing in AI tools and process efficiencies that allow us to maintain high underwriting standards without compromising on speed. Our lending is strategically focused within San Diego County, where we have deep market insight—minimizing the risk associated with overextension into unfamiliar territory.

Structural Red Flags: When Fund Design Creates Problems

Investors should be cautious of funds offering mismatched liquidity (like daily redemptions backed by illiquid loans), excessive leverage, or manager compensation tied to asset growth rather than actual fund performance.

How Fidelis is Built for Stability:
We limit leverage to no more than 20% of the fund’s total value, significantly below industry norms. This conservative posture helps protect investors in downturns. Just as important, our management team is compensated based on net income, not asset size, ensuring our interests are directly aligned with yours.

Transparency Red Flags: When Disclosure Falls Short

Lack of timely reporting, vague performance metrics, or unclear valuation practices are major warning signs. These often mask underlying performance issues or operational instability.

Fidelis’ Commitment to Clarity:
We provide comprehensive quarterly reports detailing fund performance, loan composition, and risk exposure. Our investor portal offers real-time access to statistics and updates. At Fidelis, transparency isn’t a reactive measure—it’s a core value.

Performance Red Flags: When Returns Seem Too Good to Be True

Returns that appear “too perfect” or disconnected from market conditions should give investors pause. True professionals know that real estate lending carries natural variation and risk.

Our Track Record Speaks Clearly:
Since inception, Fidelis has consistently delivered over 8% annualized returns—with minimal volatility. We don’t chase flashy yields. Instead, we manage risk deliberately, including holding a reserve fund equal to over 2% of total loan commitments as a buffer against potential losses. It’s part of our strategy to protect investor capital, not just grow it.

Operational Red Flags: When Management Raises Concerns

Frequent turnover, reactive strategy shifts, or regulatory problems can signal internal dysfunction. Investors should seek out firms with stable leadership and a proven history through market cycles.

Experienced and Steady Leadership at Fidelis:
Our management team has remained consistent from day one. Collectively, we’ve navigated multiple economic downturns—including major recessions—without a single loss of investor capital. That stability speaks volumes.

Documentation Red Flags: When Legal Protections Weaken

Some funds bury excessive discretion for management or limit investor rights in the fine print. Others lack proper alignment through meaningful co-investment or transparent compensation terms.

Fidelis Keeps Investor Interests at the Center:
Our legal structure is straightforward and investor-first. Management compensation is tied to fund performance—not the volume of assets managed—and we practice full quarterly disclosure. Moreover, our General Partners have committed over $7 million of their own capital into the fund, reflecting deep belief and aligned risk.

Investor Due Diligence: Trust, But Verify

Before committing capital, it’s wise to speak with long-term investors, review legal docs, and look closely at fund history and leadership. Strong managers welcome this scrutiny—they’ve built systems and relationships that stand up to it.

A Transparent Track Record You Can Trust: 

Fidelis doesn’t just meet industry standards—we often exceed them. With a leadership team that has managed mortgage funds through varied markets, and a fund structure designed for longevity, we invite you to explore what truly professional fund stewardship looks like.

Let’s Talk

If you’re seeking stable, income-producing investments backed by discipline, transparency, and aligned leadership, the Fidelis team is ready to connect. Reach out today at 760-258-4486 or visit www.fidelispf.com to learn more about our approach and current opportunities.